The function of natural killer (NK) and myeloid cells depends on the balance of a number of activating and inhibitory receptors. Natural cytotoxicity receptors (NCR) are the major receptors responsible for NK cell-mediated lysis of tumor and viral-infected cells. In the past few years, we have characterized the structure and function of several inhibitory as well as activating NK cell receptors. These include the crystal structures of CD94, KIR2DL2 and its complex with HLA-Cw3, NKG2D and its complex with ULBP3, NKp46 and TREM-1. Despite the progress made in understanding the function of NK receptors in the past few years, the ligands recognized by NCR remain unknown. Our effort of understanding the function of NCR has led a structural solution for NKp30. The structure revealed striking resemblence between NKp30 and CTLA-4 family receptors and enabled us to propose a potential ligand binding site.The ability of NK cells to distinguish self versus non-self cells is particularly critical in tissue transplantation and tumor rejection.UL16 binding proteins (ULBPs) are a family of cell surface proteins present in transformed and stressed cells and ligands for NKG2D. Soluble NKG2D ligands have been found in sera from cancer patients with their protein concentrations correlated with poor cancer prognosis. Here we show that human tumor cells lost their surface ULBP2, but not ULBP1 and ULBP3 expressions during NK-mediated cytolysis. The shedding of ULBP2 was induced by target cell apoptosis and a result of metalloproteinase cleavage. Inhibition of ULBP2 shedding by a metalloproteinase inhibitor BB-94 resulted in down-regulations of NKG2D expression and cytokine production on NK cells. Thus, the NKG2D ligand shedding enables NK cells to optimize their function by selectively engaging live target cells. This may be a mechanism for NK cells to distinguish live versus killed cells.